BANK OF CANADA KEY RATE UNCHANGED, OUTLOOK DOWNGRADED

Oct 21, 2015

By Bob Komsic

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As expected, the Bank of Canada kept its key lending rate at 0.5% following two surprise rate cuts earlier in the year.
But the central bank is downgrading its economic outlook again as the country keeps grappling with ”complex” aftershocks from lower oil and other commodity prices.
In its latest monetary policy report, the Bank of Canada said after flirting with a recession in the first half of the year, the economy will grow just 2% in 2016 and 2.5% in 2017.
That’s down from previous forecasts of 2.3% and 2.6%.
BoC Stephen Poloz
Bank Governor Stephen Poloz says it’ll take at least six to eight months for this year’s rate cuts to work their way through the economy.
This may delay eventual interest rate hikes here, just as the U.S. Federal Reserve Board appears ready to raise them.
This may also push the Canadian dollar even lower as investors seek higher returns in the U.S.
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